According to a survey conducted by the BMO Wealth Institute, one out of three of Canadians feel “nervous and insecure" about their debt.
In a report released on Oct. 6, the BMO Wealth Institute points to figures from Statistics Canada which show that Canadian families now owe an average of $1.63 for every after-tax dollar they earn. As for the way people perceive their debt, the poll found that 36% say it makes them feel nervous and insecure, while 20% indicated that they don't need debt and don’t plan to assume any. Others think of debt as a necessary evil, with 22% using it to build wealth and 16% taking on liabilities in order to help family or friends. Only 7% of the respondents are using debt in excess to fuel consumption.
The survey also asked people about how interest rates are affecting their behaviour (they could give more than one answer). Most of these responses were tied to real estate; 35% say low rates have prompted them to pay down their mortgage, 23% have purchased a home sooner than they had anticipated, and 18% have purchased a bigger house. Others are taking advantage of low rates in order to consolidate debt (21%) or to purchase investments (26%). However, 26% say they are also using low interest rates to "live the lifestyle they want".
"While interest rates are low, it's a great time to make aggressive principal repayments on a mortgage – as many Canadians have been doing – to offset the debt you may have because of rising real estate prices," comments Chris Buttigieg, senior manager of wealth planning strategy at BMO Financial Group. "On the flipside, Canadians should avoid the risky strategy of using low interest rates to get larger loans on more expensive homes. Given that interest rates are likely to increase in the future, there's no better time to put together a detailed debt management plan."
by Andrew Rickard Oct. 8, 2015 09:30
If would appreciate some help putting together a detailed debt management plan, call Four Points Financial Solutions at 1-866-235-0004.
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